Recently, One 97 Communication Limited, the owner of Paytm (PAYTM.NS), has introduced its International UPI payment Service. In addition to all this, Paytm’s stocks increased, which means investors supported the move. Now let us find out more about whether Paytm stock is a good share to buy, to hold or to sell? In view of this, let us discuss its performance over time, financials, latest news, and use of technical factors.
At the close on November 22, 2024, Paytm’s stock was ₹900.95, making this single stock 6.57% higher. In the last 52 weeks, the stock volatility has been high, the stocks being in between ₹310 and ₹920 and also a one week stock movement of 9.78%. However, year to date (YTD) Paytm stands as the best-performing share as it has appreciated by 41.78% while S&P BSE SENSEX only gained 9.52%.
On a monthly chart, Paytm shares have been on an upward trend with a 11.61% gain in the stock’s value over the last one month. As for the current trading sessions the stock formed the series of higher highs and higher lows that points to the healthy upward move.
Despite its positive market performance, Paytm's financial metrics reveal mixed signals:
Revenue (TTM): ₹82.79 billion
Net Income: ₹-6.8 billion (negative)
Profit Margin: -8.22%
Return on Equity (ROE): -4.96%
Total Cash: ₹86.19 billion
Paytm remains unprofitable, with a trailing twelve-month (TTM) EPS of ₹-10.40. However, the company maintains a solid cash position, and its debt-to-equity ratio is a modest 1.14%, indicating financial stability.
The revolutionary feature launched by Paytm- the International UPI allows users to make transactions on global places of interest like UAE, Singapore, France, Mauritius, Bhutan, & Nepal. By enabling payments using QR codes and providing clarity on foreign exchange rates this feature makes foreign travel easy to manage.
The management of Paytm described it as a great achievement and underlined that the company is one of the pioneers of the mobile payment industry. Now with the holiday season coming up, this innovation should provide enough motivation to its users as well as increased source of revenues.
Bernstein said, Paytm’s deliverability of additional credit interface, wallet-associated UPI, and sustainable Payment processing margins. These factors are expected to improve the viability as well as sustaInable growth rates.
Looking at Paytm's price chart we observe that the bulls are clearly in control of this stock since it makes higher highs and higher lows. Key support resides at an ascending trend line. If retracements are to happen, this trendline illustrated is expected to offer some form of support.
We also note that the daily Relative Strength Index (RSI) is close to signaling overbought , currently at 69. The stock is and may need to correct before proceeding to the next level, which is the next possible target at 997 high recorded in Oct 2023.
Strong Growth Potential: Increase in international UPI services may promote more sale hence increase the total revenue.
Positive Market Sentiment: A sustainable stock price appreciation and some relatively buoyant technical signals.
Diversified Revenue Streams: As we all know, lending services and payment margins bring in the required flexibility.
Negative Profit Margins: Paytm is still unprofitable meaning that the company still carries risks in terms of profitability to investors.
High Valuation Metrics: Looking at its Price/Sales ratio of 6.61, it might seem that the stock is very overpriced.
Regulatory Challenges: Non-adherence to business principles in multicultural segments might cause future growth concern.
Looking at the current growth of Paytm, ‘bullish’ technical indicators and the opportunity from the International UPI segment, I believe the target candidate is attractive for long-only investors. However, the fact that they remain largely unprofitable and overvalued are discouraging indicators for active and voracious acquisition.
Recommendation: Buy for risk-tolerant, long-term investors; Hold for conservative investors awaiting sustained profitability.
International UPI enabled payment feature is seen as Paytm has certainly set the pace of innovation in the Indian fintech market. Further, even if the company is struggling with the issue of profitability it is worth investing in presenting a growing list of services and fortuitously rising stocks. Before making a drastic decision, wait and see the next earnings results and technical movement.